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Humphreys v. Budget Rent A Car System, Inc.

United States District Court, E.D. Pennsylvania

December 19, 2017

ANNE HUMPHREYS, Plaintiff,
v.
BUDGET RENT A CAR SYSTEM, INC., et al., Defendants.

          MEMORANDUM

          STENGEL, C.J.

         This case involves a dispute over alleged damages to a car the plaintiff rented from Budget Rent A Car System, Inc. Defendant Viking Collection Service, Inc., attempted to collect the debt on behalf of Budget after the plaintiff declined to pay for the damages. Three counts remain in plaintiff's second amended complaint. First, plaintiff alleges Viking violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1962e, by sending communications to the plaintiff that misrepresented the amount, character, and legal status of the alleged debt. Second, plaintiff alleges breach of contract and breach of the covenant of good faith and fair dealing against Budget. Lastly, plaintiff alleges that Viking and Budget both violated the Pennsylvania Fair Credit Extension Uniformity Act (“PFCEUA”), 73 Pa.C.A. §2270.

         The parties recently moved for summary judgment. Plaintiff moved for partial summary judgment against Viking as to the first cause of action alleging a violation of the FDCPA. Viking opposed plaintiff's motion and cross-moved for summary judgment as to both claims. Budget moved for summary judgment as to plaintiff's PFCEUA and breach of contract claims. Plaintiff opposed Budget's motion.

         For the reasons discussed below, plaintiff's motion for summary judgment against Viking is denied, and Viking's cross-motion for summary judgment is granted in full. Budget's motion for summary judgment is granted in part and denied in part. First, Budget's motion for summary judgment as to count three alleging breach of the duty of good faith and fair dealing relating to timeliness of the notice is granted. I find there is a question of fact whether Budget breached the duty of good faith and fair dealing in its use of the sale date, rather than the replacement date, in the loss of use formula. With respect to count four seeking declaratory judgment, I find that the use of fair market value rather than book value is reasonable as a matter of law and does not constitute a penalty. However, because there is a question of fact whether the loss of use formula is reasonable, Budget's motion to dismiss count four is denied. Finally, Budget's motion for summary judgment on plaintiff's claim alleging a violation of the PFCEUA is granted.

         I. Background[1]

         In July 2008, Plaintiff Anne Humphreys-a resident of Pennsylvania-rented a car from Budget in Florida. As part of this transaction, she signed the standard form rental agreement and declined loss damage waiver (LDW) coverage. The rental agreement provided that if the renter declined to purchase LDW coverage and the car was lost or damaged, the renter is liable for either the estimated repair cost or, if Budget in its sole discretion determines to sell the car, “the difference between the car's fair market retail value before it was damaged and the sale proceeds.”[2] It also required the renter to pay for Budget's loss-of-use of the car, without regard to fleet utilization, plus an administrative fee, and towing and storage charges.[3]

         The events leading up to this controversy began in July of 2008 when the plaintiff's rental car stalled in a rain storm and was towed back to Budget. Budget then provided the plaintiff with a replacement car. On January 27, 2009, Budget sent the plaintiff a letter stating that she owed $11, 225.55 for damage to the first car.[4] Because the plaintiff declined LDW coverage, Budget claimed she was responsible for any damage to the car while it was in her possession, regardless of fault.[5]

         Plaintiff alleges that because Budget failed to timely notify her of the damage, the plaintiff's credit card and auto insurance companies declined to cover the claim as untimely. On March 2, 2009, the plaintiff sent a letter to Budget stating that her insurer and credit card company were not willing to pay for the damages. She declined to pay the alleged debt stating that “[s]ince the delay of notification by Budget is what precluded timely submission of the claim, it would seem that the fault lies with Budget.”[6]

         On April 10, 2009, Viking sent the plaintiff a letter[7] at her home in Philadelphia demanding full payment of the $11, 225.55 allegedly owed to Budget.[8] To arrive at that damages sum, Budget subtracted the actual disposal proceeds or salvage value of the plaintiff's rental car ($6, 775.00) from what Budget had listed as its actual cash value prior to the accident ($17, 434.12).[9] The $6, 775.00 salvage value was the amount that Budget received from selling the damaged car at auction ($7, 000.00) minus the auctioneer's towing and administrative fees ($225.00).[10]

         Budget also charged the plaintiff $150.00 for “appraisal/evaluation/administrative fees” and $416.43 for loss of revenue/use.[11] The $416.43 loss of revenue/use fee was calculated by multiplying the daily rate for the rental vehicle ($19.83) by Budget's fleet utilization estimate (70%) and then by the number of days Budget claimed had passed before the vehicle was sold (30).[12]

         A statement outlining the sale of the damaged rental vehicle at auction indicates that the car had “engine damage.”[13] The statement lists the date of loss as July 30, 2008. Id. The car was then sold on August 13, 2008.[14] The statement indicates that the “elapsed total days” related to the loss was fifteen.[15]

         According to Budget's records, the car rented by the plaintiff was purchased by Budget in January 2008 for $18, 314.00.[16] Budget listed its book value at the time of the accident as $16, 354.45, the purchase price minus the accumulated depreciation of $1, 959.55 (accounting for the decline in value over six months of use).[17]

         Subsequently, the plaintiff brought this suit against Budget and Viking seeking damages, restitution, declaratory relief, an injunction, expenses, and attorney's fees. The complaint alleges a violation of the FDCPA by Viking, a breach of contract/breach of the covenant of good faith and fair dealing by Budget, and a violation of the PFCEUA by both Budget and Viking. The complaint also asserts a count of unconscionability[18]against Budget (Count IV) and a count for declaratory judgment and injunctive relief (Count V) to prevent the defendants from collecting the charges that the plaintiff asserts she does not owe.

         II. Procedural History

         The plaintiff filed an initial complaint on March 25, 2010. (Doc. No. 1.) On May 10, 2010, the defendants filed a Motion for a More Definite Statement under Rule 12(e). (Doc. No. 9.) Subsequently, discovery in this case was stayed and the defendant's motion was denied without prejudice pending the resolution of a summary judgment motion in Benson v. Budget Rent A Car System, Inc., No. 08-4512, which involved similar questions of law and fact. The Benson motion was decided on September 29, 2011.[19]

         On April 13, 2012, I issued an order directing the parties to brief the application of the Benson decision[20] to the Humphreys case as well as a choice of law issue.[21] On April 30, 2012, the plaintiff filed a motion to amend the complaint along with her response to the April order.[22] On March 4, 2013, I granted the plaintiff's motion to amend the complaint. I found that although both this case and Benson asked the identical question of whether Budget's damages clause was reasonable, Benson would not preclude any arguments that the plaintiff may present.[23] Humphreys v. Budget Rent A Car System Inc., No. 10-1302, 2013 WL 797439, at *5 (E.D. Pa. March 4, 2013) (Stengel, J.). In response to the plaintiff's amended complaint, the defendants filed a motion to dismiss and to strike certain allegations pursuant to Federal Rules of Civil Procedure 12(b) and 12(f).

         On April 22, 2014, I granted the defendants' motion to dismiss count four of the amended complaint alleging unconscionability against Budget. Humphreys, 2014 WL 1608391, at *7. I also dismissed plaintiff's claim against Viking alleging a violation of FDCPA §1692(f)(1). Id. at *9. Finally, I dismissed without prejudice plaintiff's claim against Viking alleging a violation of FDCPA §1692(e). Id. at *10. The remaining claims survived.

         On April 13, 2017, plaintiff moved for summary judgment against Viking, arguing that Viking violated FDCPA §1692(e) as a matter of law by sending plaintiff communications that misrepresented the amount, character, and legal status of her alleged debt. (Doc. No. 149.) Viking opposed plaintiff's motion and cross-moved for summary judgment. (Doc. No. 159.) On May 25, 2017, Plaintiff opposed Viking's cross-motion. (Doc. No. 168.) On June 16, 2017, Budget moved for summary judgment. (Doc. No. 164, 166.) Plaintiff opposed Budget's motion on July 14, 2017. (Doc. No. 169.)

         III. Standard

         A court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A dispute is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is “material” if it might affect the outcome of the case under governing law. Id.

         A party seeking summary judgment always bears the initial responsibility for informing the court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the movant's initial Celotex burden can be met simply by “pointing out to the district court that there is an absence of evidence to support the non-moving party's case.” Id. at 325. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, interrogatory answers or other materials. Fed.R.Civ.P. 56(c)(1)(A). Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing “sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp., 477 U.S. at 322.

         Under Rule 56, the court must view the evidence presented on the motion in the light most favorable to the opposing party. Anderson v. Liberty Lobby, Inc., 477 U.S. at 255. The court must decide not whether the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Id. at 252. If the non-moving party has exceeded the mere scintilla of evidence threshold and has offered a genuine issue of material fact, then the court cannot credit the movant's version of events against the opponent, even if the quantity of the movant's evidence far outweighs that of its opponent. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).

         IV. Discussion

         A. Plaintiff's Motion for Summary Judgment Against Viking.

         Plaintiff argues she is entitled to summary judgment on her claim against Viking alleging a violation of FDCPA §1692(e)(2)(A). (Doc. No. 149 at 5-11.) To prevail on a claim under the FDCPA, a plaintiff must establish: (1) that he or she is a “consumer” under the FDCPA; (2) the defendant collecting the debt is a “debt collector”; (3) the challenged practice involves an attempt to collect a “debt” as the Act defines it; and (4) the defendant has violated a provision of the FDCPA in attempting to collect the debt. Jensen v. Pressler & Pressler, 791 F.3d 413, 417 (3d Cir. 2015).

         It is undisputed that plaintiff is a “consumer” and Viking is a debt collector as defined by the FDCPA. (Doc. No. 149 at 6; Doc. No. 159 at 50.) It is also undisputed that the challenged activity involved an attempt to collect a “debt” under the Act. (Id.) The issue is whether Viking violated the FDCPA in its attempt to collect the debt. Plaintiff submits that Viking's communications were “confusing and confounding” in violation of Section 1692(e). (Doc. No. 149 at 7-10.) For the reasons discussed below, I find as a matter of law that Viking did not violate the FDCPA in its attempt to collect the debt owed to Budget. Plaintiff's motion for summary judgment is denied and Viking's cross-motion for summary judgment is granted in full.

         1. Viking's April 10 communication complied with the FDCPA and cannot be construed as confusing or misleading to the least sophisticated consumer.

         The FDCPA is a remedial statute intended “to eliminate abusive debt practices by debt collectors.” Jensen, 791 F.3d at 418-19. Under the statute, a debt collector must:

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt . . . send the consumer a written notice containing -
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

15 U.S.C. §1692(g). The statute prohibits “[t]he false representation of the character, amount or legal status of any debt.” Id. at §1692(e). In applying this statute, courts employ an objective standard that asks whether the least sophisticated debtor would be confused or misled by the communication. Jensen, 791 F.3d at 418-19. The confusing or misleading statement must also be material. Id. at 421.

         On April 10, 2009, Viking sent a letter to plaintiff that she claims violated the FDCPA. I disagree. I find that Viking's letter complies with the FDCPA. The letter included the amount of the debt ($11, 225.55) and the name of the creditor (Avis Budget Car Rental). (Second Am. Compl., Ex. 4.) The letter also included the mandatory language regarding procedures to dispute the debt. (Id.) Viking's communication complied with §1692(g) of the FDCPA and was neither confusing nor misleading to the least sophisticated debtor.

         Plaintiff argues that Viking's communication is confusing because Viking failed to itemize the debt.[24] (Doc. No. 149 at 9.) At the outset, there is no general duty to itemize under the FDCPA, and such a requirement cannot be read into an otherwise unambiguous and precise statute. Had Congress intended to require itemization, it would have included such a requirement in §1692(g). Viking's inclusion of the amount of the debt was sufficient to comply with the FDCPA.

         What is more, the circumstances of this case do not necessitate itemization. Plaintiff cites Dougherty v. Wells Fargo Home Loan, Inc., 425 F.Supp.2d 599, 607-08 (E.D. Pa. 2008) and Fields v. Wilber Law Firm, 383 F.3d 562, 565 (7th Cir. 2005), arguing that a “debt collector can avoid violation of §1692(e) by itemizing the various charges that comprise the total amount of the debt.” (Doc. No. 149 at 9.) Both Dougherty and Fields are distinguishable from this case.

         In Dougherty, the debt collector added $3, 768.50 in attorney's fees and costs to the total amount owed and labeled it “recoverable corporate advances.” Dougherty, 425 F.Supp.2d at 602. The court held that this labeling was deceptive. Id. at 607-08. In Fields, the consumer owed $122.06, and the debt collector stated that the balance was $388.54. Fields, 383 F.3d at 563. This unexplained balance included attorneys' fees, which, the court concluded, “hid the true character of the debt.” Id. at 566. Both courts reasoned that itemization could have avoided the defendants' violation of §1692(e). Dougherty, 425 F.Supp.2d at 608; Fields, 383 F.3d at 566. But neither Dougherty nor Fields created a bright-line rule requiring itemization under §1692. These cases only suggest that itemization was one way to clarify an otherwise confusing communication.

         Here, Viking sought only the amount due to Budget pursuant to the rental agreement, with no additional charges. (See Second Am. Compl., Ex. 4.) Viking did not hide “the true character of the debt” or employ deceptive labeling that would warrant itemization to avoid a violation of the FDCPA. Consequently, plaintiff's reliance on Dougherty and Fields is misplaced. Viking's communication complied with §1692(g) and is neither confusing or misleading under §1692(e).

         2. The April 27, 2009 Communication.

         Viking sent a second set of documents to plaintiff's counsel on April 27, 2009. Plaintiff argues that this communication “deepened the confusion” because it “contained the highly confusing Vehicle Loss Disclosure Form.” (Doc. No. 149 at 8.) The issue is twofold: (a) whether this communication was “in ...


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